Session 79: Northeast Asia and the Japanese Developmental Model

Organizer, Chair, and Discussant: Kent E. Calder, Johns Hopkins University

Japan was the first major non-Western nation to industrialize. It has played—through its colonial role and the embedded heritage thereof—a central role in the subsequent political-economic development of East Asia as a whole. Yet the nature of Japan’s role in Asia—both as example and as causal agent—remains the subject of major and continuing scholarly debate.

This panel will consider two major, related questions: (1) the nature of the Japanese model of industrial policymaking itself; and (2) its impact within the Northeast Asian region. In considering these questions, it will explicitly integrate recent trends in Northeast Asia’s overall relationship with the world, such as globalization and deepening economic interdependence, and consider how they are transforming both the Japanese model and its application elsewhere.

Among the concrete topics to be considered, drawing on detailed comparative research between Japan and other Asian nations in each case, will be the politics of industrial-policy agenda setting and implementation; the relative roles of bureaucracy and para-public private institutions in policy formation; and the political-economic context of industrial policy, focusing on the utility of corporatist paradigms to explaining patterns of sectoral economic management. Efforts of industrial policy to cope with the problem of regional income inequality will be also considered. Policies in the electronics and telecommunications areas, including those relating to Internet development, will be the special focus of sectoral attention.

For over half a century Japan stood apart, as the sole non-Western industrialized nation, and as one of the most successful late modernizers. In changing regional and global economic contexts—through two World Wars, two Oil Shocks, and beyond—it continued to grow, with a surprising degree of social equity, at rates far beyond those prevailing elsewhere in the world. Amid a fierce intellectual debate as to the causes of such growth, its reality was uncontestable.

This panel explores the major features of the Japanese developmental model as it has evolved since the Meiji period, distinguishing persisting institutional features from those more evanescent. It reviews and critiques literature on the developmental state concept, and shows how political context has affected the actual functioning of industrial policy in Japan. It also considers in detail the technical policy tools, such as credit allocation, tax reserves, and procurement policies, that Japan has used to promote structural transformation in its economy, and how the importance of various policies has changed over time.

This panel considers in particular detail how Japan has attempted to promote sectors, such as automobiles, electronics, and telecommunications, that are becoming the recent focal point of industrial development efforts elsewhere in Asia. It also considers how Japanese industrial policy has come to terms with globalization of the world economy, and with the Information Revolution. It thus strives to present a model that serves as a vehicle for cross-national comparison, particularly with Asian nations that are both growing more interdependent with Japan and converging with it in level of industrial development.

The Emergence of the Japanese Developmental State: The Manchukuo Experience

Hiromi Murakami, Johns Hopkins University

This paper attempts to clarify the origins of the Japanese variant of the developmental state, not extensively treated in the work of Chalmers Johnson or economic historians. Particular attention is directed to how economic imperatives of the late 1920s and early 1930s affected the genesis of the developmental state pattern, and its eclectic early evolution, combining pre-existing strands from German "Nationalisierung"-style industrial rationalization with nationalistic notions developed by young Japanese bureaucrats. The subject is of special contemporary relevance because the synthesis originally developed in Manchukuo, the principal empirical object of study here, later became a prototype for post-World War II Japanese economic management, and subsequently affected developmental patterns elsewhere in the world.

This paper accents, in contrast to Johnson, the central role of private initiatives in creating major features of the developmental state, such as private-sector led industrial cartelization, and the key role of individual firms, such as Nissan, in these developments. It aims to: (1) delineate the structural framework of the early developmental state by carefully examining economic failures, unrealized plans, and incidents in the management of semi-governmental enterprises, that affected the incentive structure of industry vis-à-vis the developmental state; and (2) test the importance of private initiatives in the creation of the overall policymaking structure, by analyzing policymaking processes, membership of advisory boards (shingikai) involved in this process, and investment patterns for key industries such as steel, coal, and electric power, in response to these policy incentives. Suggestions for future comparative research on origins of developmental states elsewhere will also be presented.

Japanese Industrial Policy in a Global World: The Case of Autos in Central Japan

Stephen J. Anderson, U.S. Department of Commerce

Japan faces new challenges in dealing with globalization in its key industrial sectors. These challenges are compounded by the strong territorial orientation of traditional Japanese industrial policy, and its neglect of service-sector linkages not directly under industrial-policy authorities. The case of autos may be a bell weather regarding future patterns of Japanese economic growth, and the role of government in fostering it.

With central Japan—the heartland of Japanese manufacturing prowess—leading the way, Japanese local officials and corporate managers, together with the national government, must address hollowing out, technological changes, and related issues, in order to stay abreast of global developments. They also need to redefine traditional relationships between foreign and domestic production, and among government agencies responsible for industrial development, on the one hand, and supporting services such as transportation, distribution, and finance on the other. This paper explores, through a seminal case study, this tortuous process of integrating global imperatives into Japanese industrial policy, and draws implications for other developing nations in East Asia.

Institutional Rigidity, Broken Networks, and Technological Diffusion: A Comparative Study of the Internet Sectors in Japan and South Korea

Chung-in Moon and Yonghwan Lee, Yonsei University

Japan has always been a pace setter in technological innovation and diffusion, whereas South Korea was a follower. Nonetheless, an anomaly has emerged. South Korea has outpaced Japan in both the innovation and diffusion of Internet technology. This paper attempts to account for the foregoing anomaly by looking into institutional arrangements, network structure, and political dynamics that underly the information industries of Japan and South Korea.

China’s Electronic Sectoral Development and Export Policies: A Northeast Asian Developmental Model?

Min Ye, Princeton University

This paper examines the evolution of China’s electronics industry from a Northeast Asian developmental model perspective. It relies on current literature on Japan and Korea, and distills a set of common practices and a pattern in the electronics sectors of the two countries, including domestic industrial policies and exporting practices. China’s electronics-sector industrial development is examined against this pattern.

The government-private sector linkages in the electronics industry are the focus of this paper. Two major governmental agencies, China’s Ministry of Electronics Industry (later evolved into MII) and the State Science and Technology Commission, are thoroughly studied in regard to their roles in planning, overseeing, and disciplining domestic electronics markets and promoting exports overseas. The paper also looks at the role of a national semi-governmental organization with voluntary membership, China’s Electronics Chamber of Commerce (CECC), and examines how much coordination it affords in disseminating information and facilitating government-private firms’ relationships in the electronics sector.

Based on the detailed foregoing empirical analysis, the paper compares China’s strategy in developing both domestic electronics production and exports with the Japanese model, highlighting both similarities and differences in approach. In conclusion, the paper considers the causes of the similarities and differences between China and Japan that are revealed in the foregoing research.